Nevada Kills Leaf Data Contract In Favor Of Metrc

A Metrc tag on a marijuana plant. Plants are tagged from the seed stage and retain that tag until harvest and sale. (Courtesy photo.)

Metrc

Seed-to-sale tracking company Metrc has just notched another state on its belt. Nevada notified all marijuana establishments on September 12 that the state would replace Leaf Data Systems with Metrc effective November 1, 2017. All data that is reported to the Department of Taxation should be switched to Metrc as of November 1, although companies could continue to use approved tracking systems like MJ Freeway to send data to Metrc.

MJ Freeway was one of the pioneers in creating seed-to-sale tracking for cannabis companies and its Leaf Data system works with governments to track marijuana sales. However, MJ Freeway was attacked by hackers earlier this year causing the system to go offline and disrupting customer’s businesses. If that wasn't bad enough, the company's source code was stolen and posted on Reddit pages in June. MJ Freeway said that the theft did not affect its customer's information. The state has also had its fair share of data problems when in December, it declared a security breach with in which 11,000 patient files were affected.

The change was completely unexpected as it has been less than two years since Nevada chose Leaf Data and signed the company to a five-year contract. Until the November 1 deadline, companies must keep using Leaf Data Systems and continue paying fees for the service to MJ Freeway. The state and Metrc will be conducting roadshows to train the companies on the new system and offer information.

According to a document obtained from the Purchasing Department in the Nevada government, the estimated value of the Metrc contract is “$5,000 per month for data hosting times 48 months if $240,000; $480 per year for technical support per establishment, ties 300 establishments ties four years is $576,000, contract total would be $816,000.” Metrc will collect the seed-to-sale data from the dispensaries and that will be used to validate sale tax information, prevent diversion and provide product traceability.

The same form noted that Metrc is the only vendor providing a product specifically to regulatory agencies and that the software platform is strictly a regulatory system designed by regulators and not sold to the marijuana industry, meaning no conflict of interest.

The competition between the two companies has been fierce. Metrc grabbed Washington state’s business from Leaf Data back in May but then backed out and it went to Leaf Data as the second runner-up, while Leaf Data got the contract for Pennsylvania. Metrc started its business in Colorado in 2013 but has steadily grown to include additional states like Alaska, Maryland, Michigan and Oregon. The company has also locked down California, which is a massive win. Metrc has registered over 20,000 users and tracked over 5,000,000 plants and 3,800,000 packages.

Adult-use sales of legal marijuana just began on July 1 and business has been brisk. Marijuana Business Daily estimates that the state could see $450 million to $550 million per year in sales.

Updated: This article previously stated that Nevada's patient info data breach in 2016 was connected to MJ Freeway's Leaf Data system. Leaf was not involved in the breach.

This article also stated the Metrc landed a contract with Washington state. Leaf Data ultimately got the contract.